Market analyst: Is the grain rally over?

Ray Grabanski
Special to the Farm Forum

A lot has happened the past 13 months.

Corn future prices moved from $3.07 to a $7.76 high on May 13. Soybeans moved from $8.70 in August 2020 to $16.60 in May 2021. Hard red spring wheat moved from $4.95 in August 2020 to $9.54 on Aug. 13, 2021.

Essentially, prices doubled over the course of a year. Since rains arrived in August, those prices have been retreating (albeit slowly).  

Any serious marketer has to ask themselves, is the rally over? After all, we matched 2008 highs in corn and soybeans, and went well above them in Canola. Spring wheat got close to 2012 highs (although not near the $24 highs in 2008) due to the devastating drought in 2021.

But all good things must come to an end, right?  So the question remains: is the grain market rally ending?

We have done a lot this marketing year, allocating a shortfall in production relative to demand in what was a devastating drought year in the northwest Corn Belt. There are still questions about yields, but relatively good conditions in the East helped to alleviate concerns.

If it weren't for rains in late August, though, the good crop in the East could not overcome the devastating losses that occurred in the Northwest from mid-July to mid-August. However, based on Pro Ag yield models, the corn and soybean crop have improved a lot from mid-August levels from a national perspective, mostly due to the rain in the northwest Corn Belt.  

So Pro Ag is seriously asking the question: have we sold enough grain with prices doubling? Keep in mind, Pro Ag sold 240% of a corn crop the past year (some 2019, some 2020, some 2021 and some 2022), 365% of a soybean crop, and 310% of a wheat crop — and we are still asking if we sold enough.

So how much did you sell? These are the highest prices we've seen in seven to ten years! Of course, we held almost two crop years of grain over from 2019 and 2020 — which aided our ability to sell so much when prices went higher.  

Today's focus in the market remains weather. Weather forecasts remain warm and dry the next week, but then turn considerably cooler in the 8-14 day forecast. That means a potential frost in the northwest Corn Belt, as around Sept. 20 the first frost usually hits in northern areas of North Dakota and Minnesota. However, most of these crops are at or near full maturity as the drought pushed crops. In fact, most corn and soybeans crops are drying down quickly now.  

Quite honestly, the perfect harvest weather forecast for the Corn Belt means very little harvest losses, which might further enhance yield potential of the 2021 crop. The past two weeks, yield potential has risen — so this is just more of the same.  

Pro Ag believes 2022, 2023 and 2024 crop sales will need to be expanded later this week, as prices are still near the highs for these crops. However, 2021 crops will still see shortages and basis improvement late in the year as shortages develop.  So we see the distant months (where shortages are less likely) as more attractive sales at this point.

Weekly crop conditions on Monday showed steady soybean conditions at 57% rated good/excellent, but the Pro Ag yield model rose another 0.28 bushels per acre to 49.3 bushels, now almost a full bushel above mid-August levels (before the northwest Corn Belt rain).

Another bushel of production is 90 million bushels, which basically gives the U.S. a more comfortable carryout level. Corn conditions dropped 1% to 58% rated good/excellent, with the yield model down 0.7 bushels per acre (but losing the 1988 data year in the model). This further explains why we want to advance sales of 2022-2024 soybeans as the crises of stocks might be ending (we will survive until South America harvests their crop next spring).  

But lets not miss the forest for the trees; prices have done dynamic things already this year.  What more can be accomplished?  If you haven't sold yet, then when?

Ray Grabanski can be reached at